Facebook data centre could exclude local contractors in New Mexico
Wed 23 Nov 2016
A requirement from the general contractor in charge of building the new Facebook data center in Los Lunas, New Mexico, could exclude local construction companies from subcontracting bids.
The city offered Facebook hefty tax breaks to choose Los Lunas as the location for the company’s seventh data center in the belief that hosting the data center would stimulate the local economy.
Fortis Construction, the general contractor in charge of the data center build, held a meeting last week for potential subcontractors in which it stated that companies who wished to subcontract work directly with Fortis must rely on the Los Lunas project for no more than 20 percent of their annual revenue.
Phase 1 of the data center build is budgeted at $250 million. For a large project like this, the 20 percent limit will exclude small and medium-sized subcontractors. Only the largest 10-15% of construction companies in the state would be able to meet the stated requirement.
If local companies do not meet the requirements for subcontracting construction work on the data center buildout, Fortis could bring construction crews in from out-of-state, creating a problem for a project the state has invested in heavily in hopes that it will stimulate the local economy.
Facebook was offered tax reimbursements of up to $1.6 million per year and a thirty-year waiver on property taxes. It is also slated to receive $10 million in Local Economic Development Act (LEDA) funding in addition to the tax incentives.
When Fortis was notified that the 20 percent cap would exclude small local businesses, company spokesman Shane Kucera pointed out that companies that did not meet the requirement would still be able to work on the project by becoming a sub-tier contractor to a larger construction company.
Fortis also issued a statement in which it clarified that it, along with Facebook, is committed to hiring locally, and that Fortis would be flexible on accepting bids from companies that did not meet the revenue requirement.
David Aaroe, EVP at Fortis, said, “It’s very important to us and to Facebook that we hire local contractors. As part of our vetting process, we require primary subcontractors to have a plan in place to hire locally. The 20 percent target is flexible and we take into account multiple factors to gauge a subcontractor’s financial stability, safety records, and past performance on similar projects.”